AGB Policy Alert: Trump Administration Releases FY 2020 Budget Proposal

By AGB March 15, 2019 December 16th, 2019 AGB Alerts

On Monday, March 11, the Trump administration released its fiscal year (FY) 2020 budget. The proposal reflects President Trump’s priorities for the next year, and his opening remarks indicate that one such priority is “investing in America’s students and workers.” This budget plan includes such ideas as risk-sharing programs for higher education institutions and expanding Pell Grant eligibility to short-term programs. However, the proposal also includes an overall 5 percent cut to every department outside those involved in national security. Cuts aimed at the Department of Education would be closer to 12 percent.

Reductions in the discretionary areas of the federal budget include many agencies and programs that will affect higher education, such as spending on federal financial aid programs, student loan repayment programs, and scientific research.

Key elements of the president’s budget which impact higher education include:

Department of Education
The proposed FY 2020 budget includes a reduction of $8.5 billion for the Department of Education, cutting its budget by 12 percent from the previous year. Notable elements of the proposal include:

  • Maintaining current maximum Pell Grant amount for individuals, while expanding eligibility for short-term credentials – the proposal requests that Congress maintain the annual discretionary Pell Grant funding level at $22.5 billion, which mirrors last year’s funding level. The maximum Pell Grant award for 2020 – 2021 would be set at $6,195, the same as last year. However, the administration also requests that Pell Grant eligibility be expanded to include students who are enrolled in “high-quality, short-term programs in high-demand fields.” Partially to pay for this expansion of Pell, the proposals requests rescinding $2 billion of the current surplus amount that is in this program.
  • Reiterating support for risk-sharing requirements on institutions, by maintaining language from the FY 2019 budget that states the administration will work with Congress to develop a system for institutions to share a portion of the financial risk associated with student loans. The proposal seeks to remedy a perceived issue where, “some postsecondary programs fail to deliver a quality education that enables students to repay Federal student loans—leaving borrowers and taxpayers holding the bill.”
  • Eliminating funding for Supplemental Educational Opportunity Grants (SEOG) – the budget proposal states that SEOG is one of 29 discretionary programs that are duplicative, ineffective, poorly targeted, do not address national needs, or should be supported by other entities like states or private funders. SEOG provides aid to low-income students.
  • Eliminating new subsidized loans, which do not accrue interest until at least six months after a student leaves college. These loans would no longer be available after 2020, except to those who are borrowing to complete their programs of study.
  • Eliminating the 2007 Public Service Loan Forgiveness Program, which clears the remaining debt of those who work in qualifying government or nonprofit sectors and make 120 certified payments (or ten years’ worth of payments) toward their debt. It is unclear whether those currently in public service who have been making the qualifying payments would be affected by this cut. The budget proposal maintains a separate loan forgiveness program for teachers in the K-12 system.
  • Consolidating five income-based repayment plans into a single repayment plan, as promoted by President Trump during his campaign. This would set borrowers’ monthly payments to 12.5 percent of their income and establish a payment period for undergraduates of 15 years, after which the remainder of debt is eliminated. Graduate students would face a longer window under this new plan, with debt forgiven after 30 years of making income-based repayments.
  • Reducing funding for Federal Work-Study by almost $490 million (down roughly 55 percent) and reform the Federal Work-Study program to allocate funds to schools based in part on Pell Grant enrollment. The proposal also seeks to transform TRIO grants – programs that are dedicated to increasing the number of low-income students prepared to enter and succeed in postsecondary education – into a single $950 million state formula grant program. TRIO funding would be reduced by $110 million in the process. GEAR UP programs would be eliminated entirely.
  • Consolidating some programs for Minority Serving Institutions (MSIs), taking 6 MSI programs and combining them into a $148 million formula grant. The administration also requests more than $404 million to maintain funding for this HBCU formula and competitive grant programs.
  • Eliminating funding for International Education by zeroing out the Higher Education Act’s International Education programs.
  • Expanding Career and Technical Education (CTE) National Activities, maintaining CTE State Grant funding at $1.26 billion and increasing CTE National Programs to $20 million (a $12.6 million increase).

Other Key Agencies
Other agencies important to the higher education enterprise would also be affected. Topline changes include a budget cut of 9 percent to the National Science Foundation and a 12 percent reduction for the National Institutes of Health. Colleges and universities leverage their expertise with these agencies to perform world-class research on behalf of society at large. Cuts to them could impact university research in troubling ways.

Moving Forward
Finalizing the federal budget is a responsibility that lies with the U.S. Congress, and therefore the administration’s budget is presented as a proposal for Congress to consider. It is expected that this budget proposal will face significant revisions through the legislative processes in the House and Senate.

However, the proposal is a strong indication of the administration’s position and priorities, and requires consideration by board members and administrators as to its potential impact on higher education institutions over the long term.

AGB stands firm in its opposition to reductions in the federal budget that could harm students or have a detrimental effect on the research and innovation on our campuses. To fulfill its public trust, American higher education must both be accessible to all citizens seeking postsecondary education and equipped to advance our nation through innovation and discovery. We must seek every avenue to help our students attend and succeed in college, as well as enhance programs that lead to innovations in areas of scientific research.

AGB is concerned that the proposed cuts to federal financial aid programs will further limit low-income students from accessing the individual and societal benefit of a higher education. We also believe that substantial cuts to research foundations and institutes will hinder universities and colleges from pursuing and producing the very best research that equips our society to face new challenges and adopt innovative solutions to the problems facing the nation and the world.

As Congress works toward its own FY 2020 budget and considers the Trump administration’s proposal, AGB will continue to monitor these issues and keep members apprised of important updates as necessary.

Questions to consider:

  • Is your board informed of the array of federal student aid programs in which your institution participates—such as work-study, SEOG—as well as the number of students on your campus who benefit from these programs?
  • What areas of research on your campus receive funding from federal sources, such as the National Institutes of Health, and how might such research activity be impacted by reductions in federal spending?
  • Has your board heard from your financial aid office as to how your students may be impacted by changes to federal student aid and student loan repayment programs, and any anticipated impact such changes might have on enrollment?
  • How might these proposed reductions impact the ability of your institution to fulfill its mission, especially in the areas of research and student success?
  • Should these proposed reductions in federal support ultimately occur, has your institution assessed the financial risk and considered alternative sources of revenue to make up the difference?
  • What implications might the proposed cuts to federal work-study have on institutional operations and on-campus employment? What other services or opportunities might your institution be compelled to provide in light of decreased funding for childcare programs serving parent students?
  • Has your board considered its own advocacy role related to the proposed budget?

Additional Resources

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